What Is the Schedule C on the 1040 Form? Understanding Schedule C

Schedule C is a tax form for reporting profit or loss from a business. You fill out Schedule C at tax time and attach it to or file it electronically with Form 1040. Schedule C is for people who operate sole proprietorships or single-member LLCs.

Filing and Taxes

Schedule C calculates the business’s net profit or loss for tax purposes. This figure is reported on Form 1040 to calculate overall tax liability.

Self-employment income goes on Schedule C. Calculate self-employment tax on Schedule SE. Report that amount in the "Other Taxes" section of Form 1040.

Annual Filing Requirements

  • File Schedule C annually with Form 1040.
  • Use IRS e-file for fastest and most accurate filing.
  • Schedule C income goes on line 12 of Schedule 1, which accompanies Form 1040.

Who Must File Schedule C?

Sole proprietors report business income and expenses on Schedule C. Independent contractors also use Schedule C.

Schedule C and Self-Employment

Schedule C of Form 1040 is a tax schedule that must be filed by people who are self-employed. It’s a calculation worksheet, the "Profit or Loss From Business" statement. Your self-employment income from the year is entered and tallied here, then carried over to your Form 1040 tax return after any allowable business expenses are deducted.

Use Schedule C (Form 1040) to report income or loss from a business you operated or a profession you practiced as a sole proprietor. An activity qualifies as a business if:

  • Your primary purpose for engaging in the activity is for income or profit.
  • You are involved in the activity with continuity and regularity.

Taxpayers who earn income from a business, from freelancing, or from working as independent contractors are considered by the IRS to be self-employed. They must fill out Schedule C of Form 1040.

Accounting and Documentation

It can be onerous at best and impossible at worst to accurately account for a year’s worth of business expenses when filling out Schedule C of your Form 1040. You’ll also need to have that paperwork ready to defend your tax return if you are ever audited. You can use spreadsheets or manually track your expenses, but be sure you do it daily, weekly, and monthly.

Do I have to file Schedule C if no income?

Even if there is no income, Schedule C is for reporting profit or loss from a sole proprietorship or single-member LLC business. Calculate net profit or loss for tax purposes on Schedule C. This figure goes on Form 1040 to determine overall tax liability.

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